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Apple Is Taking a Page From the Netflix Playbook

By Danny Vena – Updated Apr 21, 2019 at 10:16PM

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The streaming giant has been ruthlessly poaching Hollywood's top talent. Now Apple is following suit.

Since embarking on its path to streaming dominance more than a decade ago, Netflix (NFLX -2.04%) has employed a number of strategies to continue its impressive growth. After experimenting with Lilyhammer in early 2012, the company launched its first original series -- House of Cards -- in February 2013. While many shows were branded as Netflix originals, other companies owned the content and remained in control of future licensing deals.

Netflix evolved again by taking ownership of some of its programs, thereby simplifying worldwide distribution deals. The company has taken that a step further in the past several years, finding showrunners and creators with impressive track records and locking them into multiyear deals to produce original programming for Netflix.

In a move that validates that strategy, Apple (AAPL -1.96%) is taking a page from the streaming giant's playbook, poaching a noted showrunner of its own.

Businessman pulling pile of $100 bills off a table

Making the jump to streaming is paying off for showrunners. Image source: Getty Images.

Exodus to streaming

Emmy and Peabody Award-winning television creator and showrunner Jason Katims, best known for his work on such hit shows as Friday Night Lights, Parenthood, Boston Public, and Roswell, is leaving his longtime home at Universal TV, a division of Comcast (CMCSA 0.34%), and has inked a multiyear deal with Apple that will begin when his current contract expires this summer.

This is the latest in a growing list of top talent creating original programs for Apple. The company had plans to spend as much as $1 billion on content over the past year, and it has signed a bevy of household names to make it happen, including Reese Witherspoon, Jennifer Aniston, M. Night Shyamalan, J.J. Abrams, and Oprah Winfrey.

While the company hasn't made any official announcement, many believe Apple is preparing to launch its own streaming service, which could debut as early as this year. If that's the case, it would go a long way toward explaining why the company is following in Netflix's shoes by enlisting the talents of some of Hollywood's top names, as well as inking deals directly with the showrunners themselves.

A growing stable of top talent

Poaching noted producers and showrunners with proven track records is a strategy Netflix has used extensively over the past couple of years. While there have been a multitude, several stand out.

Emmy, Golden Globe, and Peabody Award-winning producer, director, and writer Ryan Murphy signed a five-year deal with Netflix early last year that could be worth as much as $300 million. Murphy left his longtime home at the television studios of Twenty-First Century Fox (FOX) (FOXA). Murphy is best known for his work on award-winning shows including Nip/Tuck, Glee, American Horror Story, and American Crime Story.

Netflix also bagged prolific writer, producer, and television hit-maker Shonda Rhimes, who left Disney's (DIS -0.01%) ABC television network and inked a four-year pact with Netflix estimated to be worth $100 million. Rhimes may not be a household name, but the noted showrunner has created some of television's most recognized hits, including Grey's Anatomy, Scandal, and How to Get Away with Murder.  

A man pointing a remote at a blurred out television.

Television creators are making the move to streaming. Image source: Getty Images.

Kenya Barris also left a post at ABC to join Netflix, signing a three-year deal with the streamer that could top $100 million. Barris was instrumental in a number of the network's top hits, including Black-ish, Grown-ish, and Girls Trip

Imitation is the sincerest form of flattery

Apple's growing content ambitions are well-documented, and if the company is planning to enter the crowded streaming market, it could do worse than copying the leader in the field. Netflix has accumulated 139 million streaming customers worldwide, and while I'm a die-hard Netflix fan, I believe Apple is one of the few competitors that could take on Netflix in a meaningful way.

This could be the latest signal yet that the competition is coming for Netflix.

Check out the latest Apple and Netflix earnings call transcripts.

Danny Vena owns shares of Apple, Netflix, and Walt Disney and has the following options: long January 2019 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Apple, Netflix, and Walt Disney. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.

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